On July 7, 2017, the Office of Comptroller of the Currency (OCC) stated in a semiannual report on risks facing the financial industry, that banks should be cautious in implementing new technologies for financial products. The OCC perspective is that financial technology is forcing banks to take more “strategic risks,” as technology has created new competitors to traditional bank operations. This is forcing banks to compete with FinTech (financial technology) firms, and adopt their product models as these strategic risks are of particular interest to the regulator.¹

What This Means 

FinTech firms, (former competitors to banks given their ability to offer fast easy access to financial services such as online credit and money transfers), are now evolving into “partners” to the banks. This is a scenario the OCC thinks should make banks cautious. Keith Noreika, acting Comptroller of the OCC touched on this recently, “Strategic risk is elevated, as banks make decisions to expand into new products or services, consider new delivery channels or otherwise search for sustainable ways to generate returns.” ²

The OCC has been at the center of a FinTech discussion in recent months after laying out plans in March 2017 to issue special purpose banking charters to FinTech firms.³ This led to acrimony with state banking supervisors, who argued that the proposals would “usurp current state rules which exist to nurture innovation and protect consumers.”4 In April, the disagreement escalated when the Conference of State Banking Supervisors (CSBS) filed a lawsuit alleging over-reach on the part of the OCC when it granted charter status to non-banks.5 Mr. Noreika elaborated on his views concerning charters for FinTech firms during a July 19, 2017 speech.6

Furthermore, in its Semiannual Risk Perspective report, the OCC also warns about increasing cyber threats and terrorist related financing, highlighting a trend which saw crooks target third-party vendors last year.7 According to the report, “These third-party service providers can create concentrated points of failure for certain lines of business or operational functions for a large segment of the banking industry, and necessitate appropriate oversight.”8

Highlights from the OCC’s Semiannual Risk Perspective Report9

Key risk themes include:

  • Strategic risk remains high as banks look to expand into new products or services. Banks are facing competition from nonfinancial firms, including FinTech firms entering the traditional banking sector. This is leading to changes in the way financial institutions and customers approach banking.
  • Loosening credit underwriting standards and practices across commercial and retail portfolios remain an area of emphasis for the OCC as banks are showing increased risk appetite as they look to achieve loan growth and maintain or grow market share.
  • Banks are still challenged by operational risk due to increasing cyber threats, the need for sound governance over product service and delivery, and their reliance on concentrations in significant third-party service providers.
  • Compliance risk remains high for banks managing money laundering risk. This is driven by an increasingly complex risk environment and the need to implement changes to policies and procedures to comply with amended consumer protection requirements.


Mr. Noreika has noted that the federal banking system remains “healthy” but the OCC has identified leading risk issues in the areas of compliance, governance, and operational risk for large banks, while strategic, credit, and compliance risks issues are important areas of concern for midsize and community banks. And although the risks differ from bank to bank (based on size, region, and business model), the OCC has and will tailor its examination strategies to the individual risks of each of its supervised institutions, paying close attention to these key risk areas over the next six months.10

Note: Mr Noreika’s time as acting Comptroller will end once the US Senate confirms President Trump’s nominee for Comptroller, Joseph Otting.


  1. “Regulator Warns Banks on Use of New Technologies,” The Wall Street Journal, July 7, 2017. Access at:  https://www.wsj.com/articles/regulator-warns-banks-on-use-of-new-technologies-1499461578
  2. “Comptroller Concerned About Banks and FinTech Partnerships,” PYMNTS, July 10, 2017. Access at: http://www.pymnts.com/news/regulation/2017/comptroller-concerned-about-banks-and-fintech-partnerships/
  3. “OCC Summary of Comments and Explanatory Statement: Special Purpose National Bank Charters for Financial Technology Companies,” Office of the Comptroller of the Currency, March 2017. Access at: https://www.occ.gov/topics/responsible-innovation/summary-explanatory-statement-fintech-charters.pdf
  4. “OCC warns banks on fintech risks,” Finextra, July 11, 2017. Access at: https://www.finextra.com/newsarticle/30820/occ-warns-banks-on-fintech-risks/retail
  5. Ibid
  6. “Regulator Warns Banks on Use of New Technologies,” The Wall Street Journal, July 7, 2017. Access at: https://www.wsj.com/articles/regulator-warns-banks-on-use-of-new-technologies-1499461578
  7. “OCC warns banks on fintech risks,” Finextra, July 11, 2017. Access at: https://www.finextra.com/newsarticle/30820/occ-warns-banks-on-fintech-risks/retail
  8. Ibid
  9. “Semiannual Risk Perspective,” Office of the Comptroller of the Currency, Spring 2017. Access at: https://www.occ.gov/publications/publications-by-type/other-publications-reports/semiannual-risk-perspective/semiannual-risk-perspective-spring-2017.pdf
  10. “Remarks by Keith A. Noreika, Acting Comptroller of the Currency, Regarding OCC’s Semiannual Risk Perspective, Spring 2017,” Office of the Comptroller of the Currency, July 7, 2017. Access at:  https://www.occ.gov/news-issuances/speeches/2017/pub-speech-2017-78.pdf

Newsletter Author: Samantha Regan, Mairi Bryan,Nghi Pham

Newsletter Contact Person: Nghi Pham

Visit www.accenture.com/RegulatoryCompliance for latest insights on regulatory remediation and compliance transformation.


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